Westminster may dabble in xenophobia, but the reality is that racism isn’t popular

Painted in a certain light, Britain in the summer of 2013 can be made to look pretty nasty. Government vans crawled the streets with a threat to migrants conveyed in the tone of a police state and the idiom of the far right: “Go home or face arrest.” Politicians blame every malaise on foreign interlopers: new arrivals with jobs must be jumping the queue; those without work must be gobbling benefits and hogging hospital beds. Westminster cringes before Ukip, a party that lubricates intolerance with theatrical pub cheer.

But with a change of palette, the same country can be construed differently. The menacing vans have been steered off the streets by the threat of a legal challenge, exposing a failure of process at the Home Office. The stunt has been quietly disowned by Downing Street. (“The Prime Minister probably didn’t even know it was happening,” a senior Tory adviser tells me.) Even Nigel Farage affected distaste at a “nasty, Big Brother” device.

The anxiety about immigration that shows up in opinion polls is not matched by an exclusion of immigrants and their families from British culture. Only a year ago, the nation cheered Mo Farah and Jessica Ennis-Hill, flagbearers for multi-ethnic Britishness, as its Olympic king and queen. TV audiences elected a Hungarian dance troupe as this year’s winner of Britain’s Got Talent. It isn’t a scientific reading of the collective mood but it suggests we are some way off from nationalist frenzy.

For every ministerial dabble in the vilification of migrants, there is a caveat of admiration for the contribution that foreigners have made to the enrichment of these isles. That is the paradox of British political xenophobia – the racist element in populism must be discreet because overt racism isn’t popular.

There is plainly some ugly bigotry expressed in Ukip’s rise but the stronger animus is reserved for politicians from other parties who are accused of colluding in an open-border policy and sneering at anyone who objects. Conservative and Labour MPs say the pro-Farage voters they meet on the doorstep barely distinguish between a blue and a red rosette. They are treated as interchangeable logos on one governing machine.

So there may be less mileage than Conservative strategists think in boasting that the Tories are slamming shut the gates supposedly left open by Labour. When official statistics show net migration falling, voters don’t believe it. Besides, the transitional controls on migration from Bulgaria and Romania – EU members since 2007, whose access to the British jobs market has been delayed – will be lifted in January 2014. Ukip officials barely contain their glee at the unravelling this portends for Conservative claims to be running a “tough” border regime.

Labour suffers from a complex of agonies over immigration. It knows it has lost thousands of votes over the issue. The political computation of that number is then muddled by contradictory impulses: anti-racism as an ethical hallmark of left politics; a tendency to be automatically pro-European for fear of overlapping with Little Englanders’ cartoon hatred of Brussels; a liberal conviction that enterprising migrants are good for the economy and society; a less liberal distaste for the way globalisation treats labour as a fluid resource, sloshing across borders at capital’s behest.

Then there is Ed Miliband’s background as the son of Jewish refugees from the Nazis. The Labour leader is obliged by political reality to address resentment of mass immigration and driven by his upbringing to see the migrants’ side of the story. That could be a recipe for indecision. It may also be a useful combination, because immigrant communities in marginal seats could decide the outcome in a closely fought general election.

Non-white voters do not have uniform political preferences but there is a clear pattern of mistrust of the Tories. There are Conservatives, mostly in urban constituencies with thin majorities, who see this as a long-term crisis for the party. Their concerns have been swept aside in the tactical dash to plug the leak of angry white votes to Ukip.

By contrast, Labour’s position – interpreted generously – is to focus on the causes of antiimmigrant feeling: low wages; a housing crisis that breeds resentment of foreign families in council properties; the skills shortage in an army of unemployed youth. Miliband’s aim, say his friends, is to move the conversation away from race and on to systemic failings in an economy that permits the routine exploitation of migrants and neglect of local labour forces.

That was the point the shadow immigration minister, Chris Bryant, tried to make in a speech on 12 August but the message was garbled. The intervention was erected on a platform of factual error, resulting in an overnight rewrite and a panicky retreat from attacks on corporate employers, encouraging the less generous interpretation of Labour’s position as an unprincipled shambles.

That is unfortunate, because Miliband’s nuanced line, treating immigration anxiety as a function of deep-rooted economic insecurity, deserves an airing. Britain is not a nasty country. Nor is it poised to instal a Ukip government, as more level-headed Tories can see. One Conservative backbencher, lamenting his party’s fringe obsession, recently told me: "People talk about Nigel Farage’s great charisma. Actually, I think a lot of people see him as a bit of a dick."

Westminster devotes more energy to decoding what goes on in the minds of the one in ten voters who might back Ukip than it does to understanding the larger number of people who know that Faragism isn’t the solution. There is in any society a bitter, defensive streak that can be brought out by fear and a generous side that thrives on trust. Britain’s immigration debate would look very different if ministers overcame their fear of the fringe and trusted voters with a more honest account of the country we have and the kind of country most of us want.

The Autumn Statement proved it – we need a real alternative to austerity, now

After six wasted years of failed Conservative austerity measures, Philip Hammond had the opportunity last month in the Autumn Statement to change course and put in place the economic policies that would deliver greater prosperity, and make sure it was fairly shared.

Instead, he chose to continue with cuts to public services and in-work benefits while failing to deliver the scale of investment needed to secure future prosperity. The sense of betrayal is palpable.

The headline figures are grim. An analysis by the Institute for Fiscal Studies shows that real wages will not recover their 2008 levels even after 2020. The Tories are overseeing a lost decade in earnings that is, in the words Paul Johnson, the director of the IFS, “dreadful” and unprecedented in modern British history.

Meanwhile, the Treasury’s own analysis shows the cuts falling hardest on the poorest 30 per cent of the population. The Office for Budget Responsibility has reported that it expects a £122bn worsening in the public finances over the next five years. Of this, less than half – £59bn – is due to the Tories’ shambolic handling of Brexit. Most of the rest is thanks to their mishandling of the domestic economy.

Time to invest

The Tories may think that those people who are “just about managing” are an electoral demographic, but for Labour they are our friends, neighbours and the people we represent. People in all walks of life needed something better from this government, but the Autumn Statement was a betrayal of the hopes that they tried to raise beforehand.

Because the Tories cut when they should have invested, we now have a fundamentally weak economy that is unprepared for the challenges of Brexit. Low investment has meant that instead of installing new machinery, or building the new infrastructure that would support productive high-wage jobs, we have an economy that is more and more dependent on low-productivity, low-paid work. Every hour worked in the US, Germany or France produces on average a third more than an hour of work here.

Labour has different priorities. We will deliver the necessary investment in infrastructure and research funding, and back it up with an industrial strategy that can sustain well-paid, secure jobs in the industries of the future such as renewables. We will fight for Britain’s continued tariff-free access to the single market. We will reverse the tax giveaways to the mega-rich and the giant companies, instead using the money to make sure the NHS and our education system are properly funded. In 2020 we will introduce a real living wage, expected to be £10 an hour, to make sure every job pays a wage you can actually live on. And we will rebuild and transform our economy so no one and no community is left behind.

May’s missing alternative

This week, the Bank of England governor, Mark Carney, gave an important speech in which he hit the proverbial nail on the head. He was completely right to point out that societies need to redistribute the gains from trade and technology, and to educate and empower their citizens. We are going through a lost decade of earnings growth, as Carney highlights, and the crisis of productivity will not be solved without major government investment, backed up by an industrial strategy that can deliver growth.

Labour in government is committed to tackling the challenges of rising inequality, low wage growth, and driving up Britain’s productivity growth. But it is becoming clearer each day since Theresa May became Prime Minister that she, like her predecessor, has no credible solutions to the challenges our economy faces.

Crisis in Italy

The Italian people have decisively rejected the changes to their constitution proposed by Prime Minister Matteo Renzi, with nearly 60 per cent voting No. The Italian economy has not grown for close to two decades. A succession of governments has attempted to introduce free-market policies, including slashing pensions and undermining rights at work, but these have had little impact.

Renzi wanted extra powers to push through more free-market reforms, but he has now resigned after encountering opposition from across the Italian political spectrum. The absence of growth has left Italian banks with €360bn of loans that are not being repaid. Usually, these debts would be written off, but Italian banks lack the reserves to be able to absorb the losses. They need outside assistance to survive.

Bail in or bail out

The oldest bank in the world, Monte dei Paschi di Siena, needs €5bn before the end of the year if it is to avoid collapse. Renzi had arranged a financing deal but this is now under threat. Under new EU rules, governments are not allowed to bail out banks, like in the 2008 crisis. This is intended to protect taxpayers. Instead, bank investors are supposed to take a loss through a “bail-in”.

Unusually, however, Italian bank investors are not only big financial institutions such as insurance companies, but ordinary households. One-third of all Italian bank bonds are held by households, so a bail-in would hit them hard. And should Italy’s banks fail, the danger is that investors will pull money out of banks across Europe, causing further failures. British banks have been reducing their investments in Italy, but concerned UK regulators have asked recently for details of their exposure.

John McDonnell is the shadow chancellor

John McDonnell is Labour MP for Hayes and Harlington and has been shadow chancellor since September 2015.